Cabinet Pricing Methods

      Averaging several prices, arrived at various ways, may be a workable method. June 3, 2007

Question
I am new to cabinets and need help with pricing methods. I have seen some shops price per foot or per box. Others have an extensive catalog used to price jobs. I am looking to hire a salesperson and want to be consistent and accurate in bidding. Per foot or per box does not seem to be consistent. Every job varies so much with style, wood, finish, and upgrades. Any input would be very helpful.

Forum Responses
(Business and Management Forum)
From contributor T:
Pricing varies quite a bit with various types of producers. For example, most of the producers that sell through dealers opt for a list price per box approach. This can be adjusted with up-charges for more expensive options, such as material, finish and door choice.

It seems like most of the custom shops go with a cost plus markup approach, beginning with either a linear per foot or per square foot cost. There are other approaches and I'm sure each company will have their own good reasons as to they their approach seems to work best for them.



From contributor L:
Know your costs and use those to price in a reasonable profit. The thing I've seen sink more small shops over the years is pricing too low. They don't price in all their costs or enough to grow the business. Where do you want to be in 5 or 10 years? Are you going to be able to sell your business and retire on the proceeds?


From contributor D:
All of the above, and then average it out. Follow this simple formula, and you can not go wrong. If I were in your shoes, I would do the following…

1. Make up a model kitchen, and do some secret shopping to determine what your competition is charging, and what the market will bear. Shop custom cabinets, and factory built of equal quality as you plan to produce.

2. Take the same kitchen and do a fine tuned analysis of exactly how much material, hardware, wood, varnish, and labor it takes to produce that kitchen. Be sure to include all of the sales expenses, and usually 2 trips back to each job for one reason or the other.

3. Determine your selling price.

Once you have this information, you can then establish a simple formula for pricing your work.

A quick test to see if you are on the right track are two of the oldest pricing tricks in the book:
1. material x 3 = selling price
2. material and labor x 2 = selling price

Either one of these formulas should get you to a price equal to or less than what you have determined your market will bear. If everything is on track, you are ready to establish a simple pricing system for your salesmen.

Let's say your sample kitchen comes to:
$8000
40' of cabinets = $200 per foot
18 boxes = $444 per box
38 doors and 15 drawer fronts = 43 doors if you consider 3 DFs equivalent to 1 door
43 doors = $186 per door

Now you can price any kitchen with three simple steps. Here is how:

Let's say your next kitchen is
55 feet x $200 = $11,000
51 doors x $186 = $9,486
23 boxes x $444 = $10,212

Now take the average of these three, and this is your selling price. Guaranteed not to fail you, as these are the three major components that determine your cost in building these cabinets. Your selling price here will be $10,232. This will be your base price. This may cover oak and maple raised panel with any variety of stain. Naturally, you will have to come up with a percentage add on for cherry, maybe 15%. You will also need a percentage for glazed finishes, perhaps 10%. You may calculate a reduction from the base price for flat panel doors, maybe 7%, and reduce maybe 3% for natural finishes. Then you will need to add any accessories such as trash pullouts, lazy susans, spice pullouts, knobs and pulls, etc.

This is about the most foolproof, safest, and simplest pricing method I have developed, and used successfully. It is very easy to teach to a salesman, and protects you at the same time. I have been in this business for 20 years, and I will say that this works!

The most important part of developing the exact numbers you use is to do the proper research in determining what your competition is charging, and what the market will bear. Once you know that answer, set your price anywhere from 3%-10% higher than what they are charging, and offer more personal and professional service and attention. Believe me, this may sound crazy, but customers will actually feel more secure and confident in you and your abilities if you are a little higher than the competition. 3%-10% makes them feel they are getting better quality and value, and they are eager and willing to pay the extra bit for peace of mind. 15% is too much. They will go with your competitor if you are 15% high.



Would you like to add information to this article?
Interested in writing or submitting an article?
Have a question about this article?


Have you reviewed the related Knowledge Base areas below?
  • KnowledgeBase: Business

  • KnowledgeBase: Business: Estimating/Accounting/Profitability


    Would you like to add information to this article? ... Click Here

    If you have a question regarding a Knowledge Base article, your best chance at uncovering an answer is to search the entire Knowledge Base for related articles or to post your question at the appropriate WOODWEB Forum. Before posting your message, be sure to
    review our Forum Guidelines.

    Questions entered in the Knowledge Base Article comment form will not generate responses! A list of WOODWEB Forums can be found at WOODWEB's Site Map.

    When you post your question at the Forum, be sure to include references to the Knowledge Base article that inspired your question. The more information you provide with your question, the better your chances are of receiving responses.

    Return to beginning of article.



    Refer a Friend || Read This Important Information || Site Map || Privacy Policy || Site User Agreement

    Letters, questions or comments? E-Mail us and let us know what you think. Be sure to review our Frequently Asked Questions page.

    Contact us to discuss advertising or to report problems with this site.

    To report a problem, send an e-mail to our Webmaster

    Copyright © 1996-2017 - WOODWEB ® Inc.
    All rights reserved. No part of this publication may be reproduced in any manner without permission of the Editor.
    Review WOODWEB's Copyright Policy.

    The editors, writers, and staff at WOODWEB try to promote safe practices. What is safe for one woodworker under certain conditions may not be safe for others in different circumstances. Readers should undertake the use of materials and methods discussed at WOODWEB after considerate evaluation, and at their own risk.

    WOODWEB, Inc.
    335 Bedell Road
    Montrose, PA 18801

    Contact WOODWEB











  • WOODWEB - the leading resource for professional woodworkers


      Home » Knowledge Base » Knowledge Base Article